Thailand sees car manufacturing boom

It could be a scene from Toyota City or Detroit, but this is Thailand, a country better known around the world for its beaches and rice paddies.

With major car makers hit by a global economic downturn, the Southeast Asian nation has emerged as a rare bright spot in recent years.

Thailand's auto production surged 70 per cent in 2012 from the previous year, to 2.48 million vehicles, according to the Paris-based International Organisation of Motor Vehicle Manufacturers.

In contrast, China and India saw only single digit gains. While, in Australia, major car manufacturers Ford and General Motors' Holden are shutting up shop.

Thanks to major investment by Japanese producers as well as US giant Ford, Thailand is Southeast Asia's most prolific car maker, streets ahead of nearest-rival Indonesia.

Last year, it exported about one million vehicles.

Domestic sales also continued to surge in the first six months of 2013, although they have since slowed as the number of first time buyers lured into the market by tax breaks tails off.

It is a general growth trend mirrored across much of the region as people switch to cars from motorcycles.

Despite worries about Thailand's wider economic fortunes, car makers remain bullish about the kingdom's long-term prospects and have pumped hundreds of millions of dollars into high-tech new plants to prove it.

"There might be black clouds and there might be problems, but overall the car industry is driven by people... people with two wheels who want to get four wheels," says Uli Kaiser, president of industry analysts the Automotive Focus Group Thailand.

"I don't see that desire to stop, and I see Southeast Asia as the strongest growth territory in the world."

As the battle for market share intensifies, big car makers -- many from Japan -- are ploughing cash into new plants determined to sell more vehicles to Thailand's burgeoning consumer classes and take advantage of its location in the heart of Southeast Asia's export markets.

At a Honda factory on the outskirts of Bangkok, it takes three days to fully assemble a new car. More than 1,100 drive off the production line every day.

The Japanese maker is aiming to churn out 420,000 vehicles a year in Thailand by 2015, when a new $US644 million ($A722.42 million) car plant is expected to open outside Bangkok.

It is a far cry from 2011 when floods swamped much of the country and shut down the industry for weeks, raising fears automaking behemoths could shift their operations.

"We were severely affected... If we were a small company we would have gone bankrupt," Pitak Pruittisarikorn, executive vice president of Honda Automobile Thailand, said.

"But from the company that was affected most, we came back to be the company that has the highest growth. Now Thailand is the biggest Honda production base in the (Asia) region and will be in three or five years from now."

Last month, rival Toyota started production at a sprawling $US340 million assembly plant, its fifth in a country where it sold more than half a million vehicles last year.

The company says it will eventually make 770,000 vehicles -- from passenger cars to vans -- on Thai soil each year.

The group, which employs 13,500 people in Thailand and whose pickup trucks are ever-present on its motorways, is determined to stay in pole position.

"We have to keep our market share... We can keep between 35 and 40 per cent," said Kyoichi Tanada, president of Toyota Motor Thailand, outlining his belief that Thai consumers will continue to buy around 1.2 million vehicle each year.

Nissan meanwhile has pledged to open a second factory costing $US360 million next year, which will eventually produce 150,000 vehicles annually.

Thailand's car boom has been in part stKim Domingo